Nevada pays AT&T $26.6 million tax refund

CARSON CITY, Nev. — Nevada's Sales and Use tax revenue took a hit in June when the state had to pay AT&T a $26.6 million refund.

Taxation spokesman Stephanie Klapstein said this week that AT&T paid the use tax on materials that were shipped from a warehouse in Reno to out-of-state customers. Since the goods were sold to businesses out of state, she said the goods weren't taxable in Nevada, and AT&T was entitled to a refund.

Deducting that amount from the monthly taxable sales reduced last month's 8.6 percent growth in taxable sales to just 1.3 percent.

Even though the impact is completely within Washoe County, the state is on the hook for the majority of the refund. In June, the state paid the company the entire $26.6 million. That includes $6,877,453 generated by the 2 percent state sales tax.

In addition, the state guarantees the revenue from the 2.6 percent Local School Support Tax — a total of $8,873,634. That amount was deducted from the last Washoe School District draw-down in June.

The state will make it up to the district, but analysts say how much of that amount the state will actually have to pay depends on how much the LSST generates when the 2018 books are closed at the end of this month. Any LSST revenue over and above the amount guaranteed in the fiscal 2018 budget will reduce what the state owes the Washoe County School District.

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However, the rest of the sales tax — the amounts that go to local governments in Washoe County — aren't guaranteed by the state and will hit Washoe's city and county budgets.

That includes $1.69 million in the Basic City-County Relief Tax and $5.9 million in the Supplemental City-County Relief Tax along with $2.85 million in local option tax collections to pay for such things as the railroad trench bonds and flood control in Washoe.

Altogether, Washoe County and its local governments will lose $9.45 million.

But because those revenues aren't guaranteed by the state, the Tax Commission voted to spread the impact of refund over the next 18 months rather than hit them all at once.

Klapstein said refunds happen more often than people would think but seldom are they anywhere near this large. All refunds that exceed $250,000 must be reported to and voted on by the Tax Commission.